Reduced bank debt by approximately $55 million at the end of the first quarter of 2019 compared to the first quarter of 2018;

Generated adjusted funds flow from operations of $46.5 million ($0.29 per share basic), compared to $46.6 million ($0.29 per share basic) during the first quarter of 2018;

Invested $37 million of capital during the first quarter of 2019, approximately $10 million less than adjusted funds flow from operations;

Increased net income (loss) before income taxes and unrealized gain (loss) on risk management contracts by 29% to $22 million ($0.14/share) during the first quarter of 2019 compared to $17 million ($0.10/share) during the first quarter of 2018;

Realized an average natural gas price of $3.24/Mcf, 24% higher than the average AECO 5A daily spot price of $2.62/Mcf, and a combined realized price including liquids of $3.67/Mcfe during the first quarter of 2019 through a combination of diversified sales points and fixed physical pricing contracts, and;

Reduced operating expenses by 11% to $0.55/Mcfe during the first quarter of 2019 compared to $0.62/Mcfe during the first quarter of 2018.

Patrick Ward, President and CEO of Painted Pony, in commenting on these highlights said, "We continue to prudently manage our business in the face of ongoing natural gas price weakness in western Canada. Cold weather during the first quarter of 2019 resulted in significant withdrawals of natural gas from storage. Natural gas prices outperformed expectations in the Sumas and AECO markets. As a result of our market diversification, Painted Pony's first quarter 2019 realized natural gas price outperformed the AECO 5A daily natural gas spot price by 24%, before the impact of financial hedging. Work is underway by TransCanada Corporation to expand natural gas egress out of western Canada. As part of this construction process, we anticipate periodic pipeline restrictions throughout the summer months, which will impact spot natural gas prices in the AECO market. Enbridge continues testing and repair work on the T-South line in BC that was damaged in October 2018. This has resulted in strong pricing at the Sumas hub. We continue to watch all markets closely for opportunities to maximize our realized natural gas price. Discussions are ongoing with a number of large end-users of natural gas, including utilities, petrochemical manufacturers, and LNG exporters as we pursue additional long term supply agreements, similar to our 14 year supply contract with Methanex. We believe our portfolio of fixed-price contracts and diversified market exposure will mitigate the impact of short term local pricing. We continue to balance capital expenditures and adjusted funds flow, ensuring we maximize the near-term return on our our capital investments while reducing leverage."

UPDATED CREDIT FACILITIESIn conjunction with the semi-annual borrowing base review, Painted Pony received confirmation of syndicated credit facilities of $375 million, reduced from $400 million. Painted Pony also secured a $25 million unsecured letter of credit facility backstopped by Export Development Canada, bringing the Corporation's total credit capacity to $400 million. As at March 31, 2019, Painted Pony was drawn approximately 35% or $138 million (excluding letters of credit) on the $400 million syndicated credit facility.

FIRST QUARTER 2019 FINANCIAL & OPERATING RESULTSAdjusted Funds Flow from OperationsFor the first quarter of 2019, adjusted funds flow from operations were $46.5 million ($0.29 per share basic) consistent with adjusted funds flow from operations of $46.6 million ($0.29 per share basic) during the first quarter of 2018. The first quarter 2019 adjusted funds flow from operations was the result of a 36% increase in realized natural gas prices combined with an 11% reduction in operating expenses. Realized natural gas prices during the first quarter of 2019 averaged $3.24/Mcf, surpassing the AECO 5A daily natural gas spot price, which averaged $2.62/Mcf during the same period. This was the result of Painted Pony's ongoing market diversification strategy consisting of diverse market exposure and fixed price contracts.

ProductionPainted Pony's first quarter 2019 average daily production volumes were 326 MMcfe/d (54,389 boe/d), an increase of 4% over fourth quarter 2018 average daily production volumes of 315 MMcfe/d (52,453 boe/d). Temporary shut-ins of approximately 1,500 boe/d were experienced in the first quarter of 2019, due to third party interruptions and voluntary shut-ins due to price weakness.

Liquids production for the first quarter 2019 was reduced by approximately 1,250 bbls/d compared to the first quarter of 2018 due to a change in liquids allocation procedure at the Townsend facility as well as reduced production volumes. Effective May 1, 2019, the facility operator has agreed to amend the liquids allocation procedure which should help optimize liquids production going forward.

As previously announced in the December 17, 2018 Painted Pony press release, 2019 capital investments are expected to be limited to adjusted funds flow from operations to preserve balance sheet strength and maintain financial flexibility during this period of natural gas price weakness. Painted Pony expects average daily production volumes in 2019 to between 324 MMcfe/d (54,000 boe/d) and 336 MMcfe/d (56,000 boe/d).

Capital ExpendituresPainted Pony invested $37 million of capital during the first quarter of 2019, which included drilling 8 (8.0 net) wells and completing 5 (5.0 net) wells, as well as associated facilities and infrastructure spending. Due to consistent capital discipline combined with improved realized natural gas pricing from Painted Pony's market diversification strategy, first quarter 2019 capital expenditures were approximately $10 million less than adjusted funds flow for the same period, allowing additional funds to be applied against the drawn portion of Painted Pony's syndicated credit facility.

PricingPainted Pony's realized average commodity price of $3.67/Mcfe during the first quarter of 2019 includes an average natural gas price of $3.24/Mcf, a 24% premium to the AECO 5A daily spot price of $2.62/Mcf, compared to a 14% premium during the first quarter of 2018.

During the first quarter of 2019, approximately 50% of Painted Pony's natural gas liquids volumes were condensate, which received an average price of $64.25/bbl. Natural gas liquids, excluding condensate, received an average price of $38.01/bbl during the first quarter of 2019.

Painted Pony's long-term market diversification was strengthened further by entering into financial and physical commitments, including incremental transportation contracts to a diversity of sales markets. As a result, Painted Pony's sales portfolio includes pricing exposure in the AECO, Dawn, NYMEX, Sumas and Station 2 markets, in addition to the fixed-price contract of natural gas volumes to the Methanex methanol plant in Medicine Hat, Alberta. Based on current strip prices for natural gas at the various sales points where Painted Pony has contracted sales for the remainder of 2019, the Corporation expects it's 2019 realized natural gas prices to continue outperforming the AECO 5A benchmark price.

The existing long-term contract with Methanex Corporation increases from the current 10 MMcf/d to 20 MMcf/d in 2021 before increasing to 50 MMcf/d in 2023 and for the remainder of the contract. Painted Pony continues to pursue incremental long-term contracts with large end-users of natural gas, including utilities, petrochemical manufacturers, and LNG exporters.

Painted Pony believes the impact of commodity price volatility on 2019 realized prices should be mitigated through the combination of current fixed price contracts and sales market diversification. Production volumes of 73

MMcf/d were sold into the Dawn market in southern Ontario by Painted Pony during the first quarter of 2019. Production volumes sold into the Dawn market will increase over the coming quarters by 15 MMcf/d beginning November 1, 2019 and are expected to reach approximately 88 MMcf/d by year-end 2019.

CONFERENCE PARTICIPATIONPainted Pony is pleased to announce that it will be participating in the 2019 Cormark Montney Conference taking place on Thursday, May 23, 2019 at Cormark's Toronto offices. The Corporation will be undertaking a series of discussions with institutional investors while at this conference.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Three months ended March 31,

($ millions, except per share and shares outstanding)

2019

2018

Change

Financial

Petroleum and natural gas revenue(1)

107.7

100.8

7

%

Cash flows from operating activities

53.8

51.6

4

%

Per share - basic (3)(8)

0.33

0.32

3

%

Per share - diluted (4)(8)

0.32

0.30

7

%

Adjusted funds flow from operations(2)

46.5

46.6

—

Per share - basic (3)

0.29

0.29

—

Per share - diluted(4)

0.27

0.27

—

Net income (loss) and comprehensive income (loss) - basic and diluted

(2.6)

(8.4)

(69)

%

Per share - basic and diluted (3)

(0.02)

(0.05)

(60)

%

Capital expenditures

36.9

78.1

(53)

%

Working capital (deficiency) (5)

(6.2)

(5.1)

22

%

Bank debt

138.2

163.5

(15)

%

Senior notes

143.5

142.0

1

%

Convertible debentures - liability

46.4

45.2

3

%

Net debt (6)

341.4

396.1

(14)

%

Total assets

2,043.7

2,057.9

(1)

%

Shares outstanding (millions)

161.0

161.0

—

Basic weighted-average shares (millions)

161.0

161.0

—

Fully diluted weighted-average shares (millions)

169.9

169.9

—

Operational

Daily production volumes

Natural gas (MMcf/d)

300.2

330.5

(9)

%

Natural gas liquids (bbls/d)

4,350

5,614

(23)

%

Total (MMcfe/d)

326.3

364.2

(10)

%

Total (boe/d)

54,389

60,703

(10)

%

Realized commodity prices before financial risk management contracts

Natural gas ($/Mcf)

3.24

2.38

36

%

Natural gas liquids ($/bbl)

51.17

59.39

(14)

%

Total ($/Mcfe)

3.67

3.08

19

%

Operating netbacks ($/Mcfe)(7)

2.45

2.18

12

%

Corporate netbacks ($/Mcfe)(7)

1.96

1.76

11

%

(1)

Before royalties.

(2)

Adjusted funds flow from operations and adjusted funds flow from operations per share (basic and diluted) are non-GAAP measures used to represent cash flow from operating activities before the effects of changes in non-cash working capital and decommissioning expenditures. Adjusted funds flow from operations per share is calculated by dividing adjusted funds flow from operations by the weighted average number of basic or diluted shares outstanding in the period. See "Non-GAAP Measures".

(3)

Basic per share information is calculated on the basis of the weighted average number of shares outstanding in the period.

Working capital (deficiency) is a non-GAAP measure calculated as current assets less current liabilities. See "Non-GAAP Measures".

(6)

Net debt is a non-GAAP measure calculated as bank debt, senior notes, liability portion of convertible debentures, and working capital (deficiency), adjusted for the net current portion of fair value of risk management contracts and current portion of finance lease obligation. See "Non-GAAP Measures".

(7)

Operating netbacks is a non-GAAP measure calculated on a per unit basis as natural gas and natural gas liquids revenues, adjusted for realized gains or losses on risk management, less royalties, operating expenses and transportation costs. Corporate netback is calculated as operating netback less finance lease expense per unit. See "Non-GAAP Measures" and "Operating and Corporate Netbacks".

(8)

Cash flows from operating activities per share - basic and diluted are non-GAAP measures calculated by dividing cash flows from operating activities by the weighted average of basic or diluted shares outstanding in the period.

DEFINITIONS AND ADVISORIESCurrency: All amounts referred to in this press release are stated in Canadian dollars unless otherwise specified.

Boe Conversions: Barrel of oil equivalent ("boe") amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel of oil (1 bbl). Boe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Mcfe Conversions: Thousands of cubic feet of gas equivalent ("Mcfe") amounts have been calculated by using the conversion ratio of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of natural gas. Mcfe amounts may be misleading, particularly if used in isolation. A conversion ratio of 1 bbl to 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of natural gas as compared to oil is significantly different from the energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may be misleading as an indication of value.

Forward-Looking Information: This press release contains certain forward-looking information within the meaning of Canadian securities laws. Forward-looking information relates to future events or future performance and is based upon the Corporation's current internal expectations, estimates, projections, assumptions and beliefs. All information other than historical fact is forward-looking information. Words such as "plan", "expect", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words that indicate events or conditions may occur are intended to identify forward-looking information. In particular, this press release contains forward looking information relating to the expected netback on propane production volumes, expected 2019 capital investments, expected average daily production volumes in 2019, expected performance of the 2019 realized natural gas prices, expected impact of commodity price volatility on 2019 realized prices, and expected production volumes sold into the Dawn market.

Forward-looking information is based on certain expectations and assumptions including but not limited to future commodity prices, currency exchange rates interest rates, royalty rates and tax rates; the state of the economy and the exploration and production business; the economic and political environment in which the Corporation operates; the regulatory framework; anticipate timing and results of capital expenditures; the sufficiency of budgeted capital expenditures to carry out planned operations; operating, transportation, marketing and general and administrative costs; drilling success, production rates, future capital expenditures and the availability of labor and services. With respect to future wells, a key assumption is the validity of geological and technical interpretations performed by the Corporation's technical staff, which indicate that commercially economic volumes can be recovered from the Corporation's lands. Estimates as to average annual production assume that no material unexpected outages occur in the infrastructure the Corporation relies upon to produce its wells, that existing wells continue to meet production expectations and that future wells scheduled to come on production in the remainder of 2019 meet timing and production rate expectations.

Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations on which they are based will occur. Although the Corporation's management believes that the expectations in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated.

Forward-looking information necessarily involves both known and unknown risks associated with oil and gas exploration, production, transportation and marketing. There are risks associated with the uncertainty of geological and technical data, operational risks, risks associated with drilling and completions, environmental risks, risks of the change in government regulation of the oil and gas industry, risks associated with competition from others for scarce resources and risks associated with general economic conditions affecting the Corporation's ability to access sufficient capital. Additional information on these and other risk factors that could affect operational or financial results are included in the Corporation's most recent Annual Information Form and in other reports filed with Canadian securities regulatory authorities.

Forward-looking information is based on estimates and opinions of management at the time the information is presented. The Corporation is not under any duty to update the forward-looking information after the date of this press release to revise such information to actual results or to changes in the Corporation's plans or expectations, except as required by applicable securities laws.

Any "financial outlook" contained in this press release, as such term is defined by applicable securities laws, is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes

Non-GAAP Measures: This press release makes reference to the terms "adjusted funds flow from operations", "adjusted funds flow from operations per share", "cash flow from operations per share", "adjusted funds flow from operations per Mcfe", "income (losses) before income taxes and unrealized gains (losses) on risk management contracts", "working capital deficiency", "net debt", "operating netbacks" and "corporate netback", which do not have standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures presented by other issuers.

Management uses "adjusted funds flow from operations" to analyze operating performance and considers adjusted funds flow from operations to be a key measure as it demonstrates the Corporation's ability to generate the cash necessary to fund future capital investment and to repay debt. Adjusted funds flow from operations denotes cash flow from operating activities before the effects of changes in non-cash working capital and decommissioning expenditures. "Adjusted funds flow from operations per share" and "cash flow from operations per share" is calculated using the basic and diluted weighted average number of shares for the period. "Adjusted funds flow from operations per Mcfe" is calculated using the average production volumes for the period. These terms should not be considered alternatives to, or more meaningful than, cash flows from operating activities as determined in accordance with IFRS as an indicator of the Corporation's performance.

Management uses "working capital deficiency" and "net debt" as useful supplemental measures of the liquidity of the Corporation. Working capital deficiency is calculated as current assets less current liabilities. Net debt is calculated as bank debt, senior notes, liability portion of convertible debentures, and working capital (deficiency), adjusted for the net current portion of fair value of risk management contracts and current portion of finance lease obligation. These terms should not be considered alternatives to, or more meaningful than, current and long-term debt as determined in accordance with IFRS.

Management uses "income (loss) before taxes and unrealized gains (losses) on risk management contracts" to analyze the ongoing operational activities of the Corporation before taking into account taxes and the non-cash effects of changes in the fair value of risk management contracts. This term should not be considered an alternative to, or more meaningful than income before taxes as determined in accordance with IFRS as an indicator of the Corporation's performance.

"Operating netback" and "corporate netback" are used as a supplemental measure of the Corporation's profitability relative to commodity prices. Operating netback is calculated on a per unit basis as natural gas and natural gas liquids revenues, adjusted for realized gains or losses on risk management contracts, less royalties, operating expenses and transportation costs. Corporate netback is calculated on a per unit basis as operating netback per unit less finance lease expense per unit. These terms should not be considered alternatives to, or more meaningful than net income (loss) and comprehensive income (loss) as determined in accordance with IRFS.

Management of the Corporation believes these measures are useful supplemental measures of the net position of current assets and current liabilities of the Corporation and the profitability relative to commodity prices. Readers are cautioned, however, that these measures should not be construed as alternatives to other terms such as current and long-term debt or comprehensive income determined in accordance with IFRS as measures of performance. The Corporation's method of calculating these non-GAAP measures may differ from other companies, and accordingly, may not be comparable to similar measures used by other entities. Please see the "Non-GAAP Measures" section of the Corporation's management's discussion and analysis of the financial results of the Corporation for the period ended March 31, 2019.

ABOUT PAINTED PONYPainted Pony is a publicly-traded natural gas company based in Western Canada. The Corporation is primarily focused on the development of natural gas and natural gas liquids from the Montney formation in northeast British Columbia. Painted Pony's common shares trade on the TSX under the symbol "PONY".

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Painted Pony is a publicly-traded natural gas company based in Western Canada. The Corporation is primarily focused on the development of natural gas and natural gas liquids from the Montney formation in northeast British Columbia. Painted Pony's common shares currently...